Financial Services in 2022: Finland has what it takes to be a FinTech frontrunner

​"The financial sector is at the epicentre of a technological revolution," says Director General Anneli Tuominen in her opening remarks to the Financial Supervisory Authority's FinTech seminar. "A significant part of incumbent firms' existing business in the financial markets is at risk, because lower fee income, growing competition – also from outside the financial sector – and major IT investments are putting pressure on profitability. The winners are likely to be those who collaborate, form partnerships and open interfaces to their systems."

Digitalisation also brings new risks. "Cyber risks have to be considered at all levels of the digital value chain and throughout the product development cycle. Cybersecurity is only as strong as its weakest link," says Tuominen.

Finland has what it takes to be a FinTech frontrunner

Finland has a high level of technological expertise and a vibrant startup community, and as consumers Finns are accustomed to using mobile and internet services. There are many reasons why Finland could be a FinTech frontrunner.

The FIN-FSA is also following FinTech developments closely and wants promote the development of the financial sector in this field. The objective of the PSD2 monitoring group set up by the FIN-FSA is to exchange within the sector up-to-date information and guidance on the Payment Services Directive, discuss issues of interpretation and answer actors' questions. The Innovation HelpDesk launched by the FIN-FSA a year ago has also proved to be necessary, and the HelpDesk will continue to support new businesses this year.

Frontrunning requires international influence

Because digital business is cross-border in nature, the challenges associated with it should be met with global standards and common European legislation. "If we want to be a FinTech frontrunner, Finland must be active in international forums today. In the future, the upcoming Finnish Presidency of the EU, for example, gives Finland an opportunity to influence the EU agenda," says Tuominen. "Cooperation between the government, the authorities and the financial industry is essential to ensure that this opportunity is not lost."

Digitalisation may also create unrealistic expectations

The FIN-FSA has today warned consumers about the risks of cryptocurrencies and Initial Coin Offerings, ICOs. An ICO means offering a new cryptocurrency in exchange for financing. It appears that cryptocurrencies are being primarily used as speculative investments, with which often very unrealistic expectations are associated. The risks associated with ICOs are also not fully recognised, and regulatory protection of investors does not necessarily apply to them.